Ethiopia locked out Kenya's Safaricom from mobile money services

[Geza Ulole]

Ethiopia closes door on M-Pesa
FRIDAY, APRIL 3, 2020 8:35

M-PESA. file photo | nmg


Ethiopia has shut the door for foreign mobile phone companies like Safaricom, which had hoped to introduce its popular M-Pesa mobile money transfer platform in the market of 100 million people, saying only local companies would be allowed to do offer such services.

Safaricom had launched talks with the Ethiopian government to launch the mobile money service in the country but Thursday, the Ethiopia’s central bank said it would only allow locally-owned non-financial institutions to offer mobile money services as it seeks to boost non-cash payments.

The new directive means that only companies like Ethio Telecom, which is a government-owned monopoly, have the greenlight to move into mobile money services. It also means foreign companies have effectively been locked out. As such, for a company like Safaricom to offer the service in Ethiopia, it will need to go into partnership with Ethio Telecom, which is in line to be privatised through the sale of a minority stake.

Safaricom, in partnership with its parent company Vodacom, and a number of other global telecom firms such as MTN, Orange, Etisalat and Airtel, have all expressed interest in gaining access to Ethiopia’s fast-growing mobile phone services market.

Without further changes to the regulations, Safaricom will remain unable to offer mobile financial services business in the customer-rich market, analysts said.

“This directive effectively excludes foreign fintech and telecom companies from reaping the business benefits,” Bahakal Abate, a corporate lawyer in Addis Ababa, told Reuters.

Besides telecommunications, the Ethiopian government last year announced plans to open up the aviation sector, the State logistics firm and electricity monopoly to private investment. The telecommunications monopoly, Ethio Telecom, is seen as the biggest prize due to its huge protected market. Ethio Telecom’s subscriber base of 44 million makes it the biggest single-country customer base of any operator in Africa.

Players like Safaricom are attracted by the growth potential in that market, whose 100 million population means the country a penetration rate of 44 percent. By contrast, Kenya’s 52.2 million mobile phone subscribers gives it a penetration of 109.2 percent.

M-Pesa has the potential to transform Ethiopia’s economy, as it has done in Kenya, by allowing people to sidestep a rickety and inefficient banking system and send each other money or make payments at the touch of a phone button. The ability to access digital banking services is likely to be a game-changer for Ethiopians whose banking sector has no way of transfering funds from one bank to another.

Safaricom is one of several Kenyan firms that have been eyeing the Ethiopian market for years due to the country’s huge population. Ethiopia has kept foreign involvement in the economy at a bare minimum.

The country has consistently registered robust economic growth, averaging 10 percent in the past five years, and its ongoing economic reforms look set to strengthen investor sentiment. Its population, which is the second largest in Africa after Nigeria, also offers immense opportunities for business.

Ethiopia closes door on M-Pesa

MY TAKE
Wapi kelele za Wakunya za "we will do business with Ethiopia and stop doing business with lazy Tanzanians?"
Aisee si kwa kelele zile!!! Brmance ya IGAD haijasaidia IGAD a club of backstabbers !?? 😂 😂 👇



#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala mwathadan 👉 ☝☝👉👇

 

[Geza Ulole]

Ethiopia’s move to bar foreign telcos slows liberalisation


MONDAY AUGUST 10 2020

Ethiopia had invited foreign firms to buy stakes in Ethio Telecom to end its monopoly. FILE PHOTO | NMG

Summary

• The decision came after the government reviewed the list of companies intent on buying a stake in Ethio Telecom.
• As part of its home-grown economic reform agenda launched in 2019, Ethiopia in June last year made an official invitation to foreign telecom companies to buy a 40 per cent stake in Ethio Telecom.
• The privatisation of Ethio Telecom has attracted a number of telecom infrastructure companies such as Helios Towers, a UK based giant telecom infrastructure developer.

By TESFA-ALEM TEKLE
More by this Author

The Ethiopian government has suspended the entry of foreign telecom infrastructure companies into the country, possibly slowing down the enthusiasm that arose after authorities announced plans to liberalise the market.

The decision, however, may not affect foreign telecom service providers and operators such as Kenya's Safaricom and its parent company Vodacom, who had submitted expression of interest in buying a stake in Ethio Telecom.

The decision came after the government reviewed the list of companies intent on buying a stake in Ethio Telecom.

As part of its home-grown economic reform agenda launched in 2019, Ethiopia in June last year made an official invitation to foreign telecom companies to buy a 40 per cent stake in Ethio Telecom, a move that would end a long monopoly in the sector.

As well as service providers, the privatisation of Ethio Telecom has attracted a number of telecom infrastructure companies such as Helios Towers, a UK based giant telecom infrastructure developer.

Ethiopia's telecom sector transformation has two components, Ethio Telecom, the sole supplier of telecom services and Ethiopian Communication Authority (ECA) the one in charge of licensing for the two international telecom companies to enter the country.

Sources from Ethio Telecom told The EastAfrican that several foreign telecom infrastructure companies have approached Ethiopian authorities in a bid to enter to country's market with intentions to build new telecom infrastructure and to ultimately lease telecom towers and rent other facilities for incoming companies.

But attempts by the ECA to bring in foreign telecom infrastructure firms have angered Ethio Telecom, whose officials argue they have spent billions of dollars on telecom infrastructure across the country in recent years. In protest, the management filed a complaint letter seeking the government's intervention on the matter.

"The government has decided not to allow foreign telecom infrastructure companies. They will not be allowed to operate here," Ethio Telecom chief executive Frehiwot Tamiru told the media on Thursday. Ethio Telecom intends to earn substantial amount of money in rent from entrant companies.

"We have built sufficient telecom infrastructures like fibre cables and mobile base masts that we can rent it to the newly entering companies. So the incoming telecom operators will either use our existing infrastructure by renting or build their own,” she added.

Ethio Telecom has also written a letter to the Ethiopian Communication Authority to express its concerns over the ongoing privatisation process and is awaiting a response.

"We do not believe that the authority will take any action that could jeopardise Ethio Telecom's existence," said Ms Frehiwot. "But there are still some issues that we have not agreed on," she added.

Some 12 international telecom companies had expressed interest to buy a stake in Ethio Telecom to gain a foothold in Africa's fastest growing economy.

Ethiopia’s move to bar foreign telcos slows liberalisation